Albemarle (ALB) has agreed to purchase a 50% stake in an Australian lithium mine for $1.15 billion, as General Motors (GM), Ford Motor (F), Tesla (TSLA), Volkswagen (VWAGY) and other global automakers ramp up investments in electric cars.
Albemarle, the world’s largest producer of lithium, plans a joint venture with Australia’s Mineral Resources to develop the Wodgina mine in Western Australia. The companies also plan to ultimately build and run a plant producing lithium hydroxide for car batteries.
The Wodgina mine is a “world-class hard rock lithium deposit, with an estimated mine life of over 30 years,” Albemarle said in a statement.
Lithium demand is poised to balloon over the next several decades amid a global battery boom for electric cars and many other industries. Lithium stocks soared in 2016 and 2017 but have come under pressure this year amid worries about oversupply as more production capacity comes online.
Albemarle stock shed 0.2% to 95.53 on the stock market today, extending a decline below the 50-day and 200-day moving averages. Chilean lithium miner Sociedad Quimica y Minera (SQM) rose 2.6%, stemming a three-session slide but in a 10-month downtrend. Lithium-related stock FMC (FMC) rose 1.1%. Livent (LTHM), a recent lithium products IPO spun off from FMC, fell about 1%.
GM advanced 1.3%, Ford rose 0.4%, Tesla lost 2.7% and Volkswagen popped 4.4% to reclaim the 50-day line. China electric carmaker and new IPO stock Nio (NIO) added 0.65%.
Lithium Demand Soars Amid Global Battery Boom
Demand for battery minerals such as cobalt and lithium is expected to soar over the next decade as governments, led by China, crack down on vehicle emissions.
That push has seen carmakers ramp up investments in electric vehicles. Volkswagen said Nov. 16 it will boost spending on electric cars and other emerging technologies by nearly 30% over the next five years, to $50.17 billion. Ford is investing $11 billion through 2022 on expanding its portfolio of electrified vehicles.
Other automakers aim to secure lithium supplies as they accelerate plans for electric vehicles.
Toyota Motor (TM), for example, is investing $232 million for a 15% stake in Australian lithium producer Orocobre.